A mortgage team reviews an affiliated-business disclosure before a referral is made. Which RESPA response should guide the file?
Correct Answer
B) Do not exchange value for settlement-service referrals
Why this is correct: The Real Estate Settlement Procedures Act (RESPA) RESPA's anti-kickback rule and Regulation X prohibit giving or accepting any fee, kickback, or thing of value in exchange for referrals of settlement service business. This is a core anti-kickback rule. The affiliated business disclosure (AfBA) is a separate but related requirement for certain referrals to affiliated companies; however, even with a proper disclosure, exchanging value for referrals remains illegal. Why the other choices are wrong: "Use an internal exception instead of the required federal disclosure or timing rule" is wrong because RESPA's anti-kickback and disclosure rules are federal mandates that cannot be bypassed by internal policy. "Wait until a regulator asks for the file before applying the federal requirement" is wrong because RESPA compliance is required at the time of the referral, not deferred. "Delay the RESPA AfBA Disclosure step until a later flood insurance review instead of acting now" is wrong because the AfBA disclosure must be provided at or before the time of referral, as specified by RESPA timing rules. Exam tip: RESPA's RESPA's anti-kickback rule is a strict liability provision. No exchange of value for referrals is ever allowed, regardless of disclosures.
Why This Is the Correct Answer
The correct response is "Do not exchange value for settlement-service referrals" because RESPA/Regulation X limits referral value and sets servicing disclosure and response duties.
Why the Other Options Are Wrong
Option A: Use an internal exception instead of the required federal disclosure or timing rule.
Use an internal exception instead of the required federal disclosure or timing rule. is not correct because it does not apply the rule tested by this file scenario.
Option C: Wait until a regulator asks for the file before applying the federal requirement.
Wait until a regulator asks for the file before applying the federal requirement. is not correct because it does not apply the rule tested by this file scenario.
Option D: Delay the RESPA AfBA Disclosure step until a later flood insurance review instead of acting now.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
Memory Technique
RESPA servicing and affiliated-business rules: identify the rule being tested, then choose the action that documents or applies that rule before the file moves forward.
Exam Tip
Match the file facts to RESPA servicing and affiliated-business rules; do not choose an exception or shortcut that skips the required rule.
Common Mistakes to Avoid
- -Choosing an internal exception instead of the governing rule
- -Treating preliminary or informal facts as a substitute for required documentation
- -Answering from a familiar but unrelated mortgage topic
More Federal Laws Questions
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Before the team acts on a production meeting, a training manager must address SCRA Interest Rate Cap. Which response is most defensible?
Before the team acts on a production meeting, the MLO must address FCRA Adverse Action Notice. Which response is most defensible?
A team member asks about RESPA Kickbacks and Referrals in an investor-delivery review while trying to confirm the rule-based response. Which response should the loan team use?
During a disclosure desk review, the loan team encounters an RESPA Servicing Transfer issue. Which response should avoid a shortcut that would misapply the rule?
A mortgage team asks a quality-control reviewer about TRID Loan Estimate timing during a record-retention audit. Which answer should guide the file?
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A disciplinary-risk review raises a question about TILA APR and finance-charge rules. Which action should the renewal specialist recommend?
An MLO is reviewing procedures for a case where a compliance analyst asks why covered mortgage application data is collected. What is the proper handling?
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